New Position: DIS

A year or two ago I put together a trade on DIS – it is a four-star rated Dow stock that pays an annual dividend.  The earlier trade was a successful one for Rescue My IRA, so I decided to start a new position in DIS after the series of unwind trade I had just completed.  That’s even despite the double-digit gains this stock has already recorded year-to-date.

Unless the shares are called away, my plan will be to roll the shares out monthly until I collect the dividend, or to write a call that will be assigned in December during a prospective dividend run.

Here is a summary of the position plan for DIS, net of commissions and fees.

DIS

Transactions

Bought 100 shares at average share price $85.78 (total $8,577.93)
Sold 1 $87.50 Aug 2014 covered call

Net Profit:

1) Options Income:  = $83.74
2) Dividend Income (December ex-dividend): $0.00
3) Capital Appreciation if assigned at $87.50:  $154.07

Total Net Profit if assigned and dividend collected:  $237.81
Absolute Return on Investment: ($237.81/$8,577.93) = 2.77%
Annualized Return if Assigned and Dividend Collected (30 days):  2.77%*(365/30) = 33.73%